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10th March 2016

Singapore Real Estate

Changes to housing developers' rules

Recent rule changes by the Urban Redevelopment Authority (URA) will make it harder for aspiring developers with limited track records to build and sell private homes. The changes also mean that developers must commit more paid-up capital in order to apply for a housing developer's sale licence.

With fewer contracts to go around and labour costs continuing to rise, construction firms are being squeezed from both sides. The broader effect on the economy may not be dire, with the sector accounting for only about 5 per cent of GDP. But economists expect - and firms fear - that there will be casualties within the industry.

Rentals of both private apartments/condos and Housing & Development Board (HDB) flats fell in February 2016, SRX Property's latest flash estimates showed. However, HDB flat rents have been showing greater resilience compared to those of non-landed private homes, on a longer-term basis.

Propnex Realty has proposed a tiered approach to tweaking the additional buyer's stamp duty (ABSD) in its recommendations on how property cooling measures can be adjusted. Its detailed proposal was released amid increasing calls from the real estate industry for the government to review its cooling measures as the Singapore Budget draws near. A fuller list of recommendations has been submitted to the Ministry of Finance and the Ministry of National Development.

Speaking at a dialogue session at PropNex’s annual convention on Wednesday (March 9), Minister for Social and Family Development Tan Chuan-Jin said the Government was not averse to adjusting the curbs if circumstances change. “It’s a question of whose timeline are we operating on. Obviously from the perspective of an individual, from the real estate sector, you’d feel that we ought to move faster, we shouldn’t be so cautious. Rightfully so, but we are trying to look at these issues through different lenses,” he said. The Government’s considerations include the economic environment and its impact on wages and people’s ability to borrow, as well as the housing supply situation, he added.

Collaborations between the public and private sectors have helped transform the real-estate sector, Senior Minister of State for Health and the Environment and Water Resources Amy Khor said yesterday. "The public-private partnership has also helped to build our external wing by exporting our expertise in industrial parks and township developments," she said.

A second hearing in Singapore has been set for the case between Singapore tycoon Oei Hong Leong and Canada's Concord Pacific Acquisitions, the company against which he began action last October over a disputed plot of prime land on the waterfront in downtown Vancouver. The hearing, originally scheduled on Wednesday, has been adjourned to April 15 because the counsel involved could not be present.

The most noteworthy feature of Ho Bee Land's financial results for the year ended Dec 31, 2015, is the surge in rental income, which attests to the group's success in building a business model with a strong base of recurring income. The group used to be a very different animal. Ho Bee Investment, as it used to be called, was a stockmarket darling in 2006-2010 when it reaped bumper profits from developing homes in the waterfront residential enclave of Sentosa Cove.

Cache has two master leases expiring in 2016; distribution per unit (DPU) could be further eroded. The two master leases are at Schenker Megahub (expiring Aug 31, 2016) and Hi-Speed Logistics Centre (expiring Oct 15, 2016).